ASIAN CONSTRUCTION and DEVELOPMENT CORPORATION vs.

PCIB
(April 25,2006)
FACTS: Respondent PCIBANK filed complain for a sum of money with prayer
for preliminary attachment against petitioner ASIACON.
The first cause of action was that ASIACON had not paid its credit account
with PCIBANK amounting to $4,487,000. The second cause of action was that
PCIBANK suffered damages and prayed that ASIACON pay Exemplary
damages, attorneys fees, and the cost of suit, and that ASIACON is guilty of
fraud in contracting the debt and in the performance thereof or both.
By way of defenses, ASIACON pleads in its answer the alleged Severe
Financial Crisis which hit the Philippines in July 1997 which affected and put
it out of business.
PCIBANK filed a verified Motion for Summary Judgment therein contending
that ASIACONs defenses are a sham and that the financial crisis alleged in
the answer is not a fortuitous event that would excuse debtors from their
loan obligations, nor is it an exempting circumstance under ART. 1262, CC.
RTC in favor of PCIBANK granted the motion for Summary Judgment.
Upon Appeal, the CA affirmed with modification the Summary Judgment,
reducing the amount of attorneys fees from (P1,260,000) to (P1M).
With its motion for reconsideration denied by the CA, ASIACON now appeals
to the SC.

ISSUES: (I) Whether or not there is a genuine issue as to the material fact
which rules out the propriety of the summary judgment;
(II) Whether or not the award of Attorneys fees is exorbitant or
unconscionable.

RULING: (I) CA did not commit any reversible error in affirming the
summary judgment rendered by the trial court as, at bottom, there existed
no genuine issue as to any material fact.
(II) CAs reduction in the award of attorneys fees to only P1,000,000.00,
given the fact that there was no full-blown trial.

Petitioner failed to append, to its "Opposition" to the "Motion for Summary

Judgment", "Affidavits" showing the factual basis for its defenses of
"extraordinary deflation," including facts, figures and data showing its
financial condition before and after the economic crisis and that the crisis
was the proximate cause of its financial distress. It bears stressing that the
[petitioner] was burdened to demonstrate, by its "Affidavits" and
documentary evidence, that, indeed, the Philippines was engulfed in an
extraordinary deflation of the Philippine Peso and that the same was the
proximate cause of the financial distress, it claimed, it suffered.
A "genuine issue" is an issue of fact which requires the presentation of
evidence as distinguished from a sham, fictitious, contrived or false claim.
When the facts as pleaded appear uncontested or undisputed, then there is
no real or genuine issue or question as to the facts, and summary judgment
is called for.
The party who moves for summary judgment has the burden of
demonstrating clearly the absence of any genuine issue of fact, or that the
issue posed in the complaint is patently unsubstantial so as not to constitute
a genuine issue for trial.
The [petitioner] may have experienced financial difficulties because of
the "1997 economic crisis" that ensued in Asia. However, the same does not
constitute a valid justification for the [petitioner] to renege on its obligations
to the [respondent].
It is a fundamental rule that contracts, once perfected, bind both contracting
parties, and obligations arising therefrom have the force of law between the
parties and should be complied with in good faith. But the law recognizes
exceptions to the principle of the obligatory force of contracts. One exception
is laid down in Article 1266 of the Civil Code, which reads: The debtor in
obligations to do shall also be released when the prestation becomes legally
or physically impossible without the fault of the obligor.
Petitioner cannot, however, successfully take refuge in the said article, since
it is applicable only to obligations "to do," and not obligations "to give." An
obligation "to do" includes all kinds of work or service; while an obligation "to
give" is a prestation which consists in the delivery of a movable or an
immovable thing in order to create a real right, or for the use of the recipient,
or for its simple possession, or in order to return it to its owner.